Donald Trump standing alongside Gary Cohn, Steve Mnuchin, Elaine Chao and  Mick Mulvaney Drew Angerer/Getty Images

America’s Tax-Cut Peronists

American populism in the Trump era, though promising great gains for working people, will in fact benefit only those who are already rich. That's quite a twist on anything Argentina's Juan Perón could have imagined pulling off, but, if left unchecked, the result, in terms of economic hardship and national decline, will be the same.

WASHINGTON, DC – Name the country. Its leader rails against foreigners, erects various import barriers, and pushes for low interest rates and lots of cheap credit for favored sectors. Government debt is already high, but the would-be strongman in power decides to pile on even more by increasing the budget deficit, arguing that this will boost prosperity to previously unattainable levels. While the government claims to represent the common people, state contracts are awarded to friends of friends.

The answer, of course, is Argentina under Juan Perón, who was in power from 1946 to 1955 (and again briefly in 1973 and 1974), and many of his successors. One of the richest countries in the world around 1900 was laid low by decades of unsustainable economic policies that made people feel good in the short run but eventually ended in disaster, such as runaway inflation, financial crisis, and periodic debt defaults. (To be clear, Argentina’s economic policies today are quite different; for deep and up-to-date analysis, I recommend the work of my colleague Alberto Cavallo.)

But if your answer was the United States under President Donald Trump, you would not be far off. There is reason to fear that the US is now on the path to what was previously known as Latin American populism.

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